”We believe that a smooth transition is essential for the long-term health of the DeFi ecosystem and its platforms, including those using our tokens,” As stated by Tether.
On the heels of an official announcement by USD Coin (USDC) issuer Circle Pay, stablecoin behemoth Tether has now formally announced its support for Ethereum’s planned Merge upgrade and transition to a proof-of-stake (PoS) consensus mechanism-based blockchain.
The news was made on the same day as its stablecoin rival, who committed to support only Ethereum’s much anticipated update.
In a statement released on Tuesday, Tether referred to the Merge as “one of the most crucial moments in blockchain history” and explained that it will operate in accordance with Ethereum’s upgrade timetable, which is presently scheduled for September 19:
“Tether believes that in order to avoid any disruption to the community, especially when using our tokens in DeFi projects and platforms, it’s important that the transition to POS is not weaponized to cause confusion and harm within the ecosystem.”
“Tether will constantly monitor the preparations for this event and will enable POS Ethereum according to the approved schedule. Tether stated, “We believe a smooth transition is crucial for the long-term sustainability of the DeFi ecosystem and its platforms, including those that use our tokens.”
Despite the fact that the official declaration was only released today, the stablecoin issuer’s chief technology officer Paolo Ardoino announced in July that they intended to support the post-Merge Eth2 blockchain.
According to CoinGecko, Tether (USDT) is the largest stablecoin in crypto with a market size of $66.6 billion, while USDC is reasonably close behind with a market cap of $54.1 billion. At the time of writing, both stablecoins have a considerable portion of their circulating supply on Ethereum’s current proof-of-work (PoW) network, with USDT at $32.3 billion and USDC in first place with $45.1 billion.
Given the size and prominence of these stablecoins in the stablecoin market, this support should result in a smooth transition for the Ethereum, Tether, and USD Coin ecosystems, as well as the broader cryptocurrency market.
However, as Ethereum co-founder Vitalik Buterin has cautioned, this power might possibly cause problems in future Ethereum hard forks, since centralized corporations such as Tether and Circle may opt to employ their own split chain rather than the one advocated by the Ethereum community.
“I think in the further future, that definitely becomes more of a concern. Basically, the fact that USDC’s decision of which chain to consider as Ethereum could become a significant decider in future contentious hard forks,” he said.
This week Ethereum will conduct its final Merge test on the Goerli testnet, and assuming all goes according to plan, the Sept. 19 Merge date is not expected to be postponed.